How To Create a Killer Go-To-Market (GTM) Strategy | Dose 009

Dreamit

5 Sept 201905:37

Summary

TLDRThis Dreamit Dose video emphasizes the importance of a well-defined go-to-market strategy for startups, focusing on the early targeting of customers. Many startups fail to articulate a clear strategy, leading to long sales cycles and missed opportunities. The video uses a fishing analogy, comparing startups chasing large clients with fishing for big tuna versus targeting smaller, more accessible customers in the back bay. The key takeaway is to focus on markets where sales cycles are shorter, traction is faster, and customers fit the startup's value proposition for early success.

Takeaways

🎯 Most startups struggle with defining an effective go-to-market (GTM) strategy, often giving vague or wrong answers like 'direct sales' or 'channel partners.'
🏹 A successful GTM strategy involves clearly identifying early target customers and their specific characteristics, not just labeling them as 'early adopters.'
🐟 The analogy of fishing is used to explain the importance of targeting the right customers. Startups should focus on 'back bay' opportunities—smaller, easier targets—rather than going after the 'big tuna.'
⚡ Early customers should have problems that are efficiently solved by the product, aligning with the startup's value proposition and pricing model.
⏳ Startups should avoid long sales cycles (e.g., 12-18 months) with large, prestigious clients, and instead focus on smaller organizations where they can close deals faster.
🛶 Focusing on less competitive, 'underfished' markets can yield quicker traction, even if the logos aren’t as prestigious.
🔍 Startups should develop a 'fish finder'—a litmus test to identify the best early customers by evaluating their size, geography, and pain points.
💼 An example in securetech is provided, where a startup targets regional banks, as they have smaller teams and a greater need for automation, making them easier to sell to and add value.
🚀 Startups should aim for shorter sales cycles, faster adoption, and early revenue growth by targeting customers where the product’s value proposition fits best.
⚠️ Many startups fail by targeting the wrong customers, leading to long, unsuccessful sales cycles that drain resources and ultimately cause the business to collapse.

Q & A

What common mistake do early-stage startups make when asked about their go-to-market strategy?
-Many early-stage startups give vague or overly simplistic answers like 'direct sales' or 'channel partner strategy,' rather than providing a clear, targeted plan with specific customer criteria.
Why is it important for startups to clearly define their early target customers?
-Defining early target customers is crucial because it helps identify those who will benefit most from the product, leading to faster sales cycles, quicker adoption, and better alignment with the startup’s value proposition.
What characteristics should startups consider when identifying early target customers?
-Startups should focus on characteristics such as customer size, pain points that the product efficiently solves, alignment with the pricing model, and how well the customer fits the startup's business model and value proposition.
What analogy does the speaker use to explain go-to-market strategy, and how does it relate to startups?
-The speaker compares go-to-market strategy to fishing, where startups need to decide whether they are 'tuna fishing' (going after big, difficult clients) or 'back bay fishing' (targeting smaller, more accessible customers). The analogy emphasizes targeting customers who are easier to acquire for early traction.
Why does the speaker suggest that startups should avoid focusing solely on large, prestigious clients?
-Focusing only on large clients, such as prestigious academic medical centers, often leads to long sales cycles of 12-18 months. Startups can exhaust their resources without closing deals, while smaller, regional clients may offer quicker wins and faster revenue generation.
How does the speaker recommend balancing between pursuing large and small customers?
-The speaker suggests 'fishing where the fish are,' meaning startups should target smaller, less competitive clients (e.g., regional hospitals) that align well with the product's value proposition, allowing for faster deals while still growing the business.
What is the 'litmus test' the speaker refers to when selecting target customers?
-The litmus test refers to a set of criteria that startups can use to quickly determine if a customer is a good fit for their product. These criteria might include the size of the company, the alignment with the pricing model, and the speed of adoption.
What example does the speaker give to illustrate effective customer targeting in the securetech industry?
-In securetech, the speaker suggests targeting regional banks instead of large, national banks. Regional banks typically have smaller teams, making it easier for startups to demonstrate value through automation and quicker customer onboarding.
What is the risk of targeting customers with long sales cycles early on?
-Startups that target customers with long sales cycles, such as large enterprises, risk running out of resources ('their boat runs out of gas') before they can close deals, ultimately leading to failure.
What is the overall takeaway from the speaker's advice on go-to-market strategy?
-The key takeaway is that startups should focus on targeting the right customers early on, who offer shorter sales cycles, faster revenue, and better product alignment. This approach helps build early traction, ensuring sustainable growth.

Outlines

00:00

🎯 The Common Go-to-Market Strategy Mistake

The speaker introduces the concept of go-to-market strategies and highlights how most early-stage startups fail when asked about theirs. Many startups respond with generic answers like 'direct sales' or 'channel partnerships' without understanding what a go-to-market strategy truly entails. The speaker emphasizes the importance of targeting specific early customers whose pain points are solved effectively by the startup's product. This is crucial for generating revenue and gaining traction quickly.

05:02

🐟 Fishing for the Right Market

The speaker compares go-to-market strategies to fishing, where the goal is to fish where the fish are most plentiful and accessible. Instead of going 'big tuna fishing' far offshore (targeting hard-to-reach, high-prestige customers), startups should focus on 'fishing in the back bay'—targeting smaller, less competitive markets where it's easier to close deals. The analogy stresses the importance of choosing target customers that align well with the startup's value proposition and are easier to convert into sales.

🏥 Healthtech and the Big Game Fishing Mistake

Using healthtech startups as an example, the speaker explains that many companies focus on prestigious academic medical centers, which have long sales cycles and are saturated with competitors. Instead, startups should consider targeting smaller, less competitive institutions like regional hospitals. These institutions may have the same problems, but they offer a faster sales cycle and more accessible entry points. The speaker argues that showing smaller, lesser-known logos can still impress investors when the strategy delivers strong revenue.

🧪 The Litmus Test for Targeting Early Customers

The speaker introduces the concept of a 'litmus test' for identifying the right early customers. Using securetech targeting regional banks as an example, the speaker explains how smaller customers with leaner teams are often more receptive and easier to close, as the product's value proposition fits their specific needs. By focusing on geographic proximity or smaller organizations, startups can generate more value and close deals faster. The litmus test helps refine which customers to target for the highest impact and quickest results.

🧗 Avoid the Pitfall of Unfocused Targeting

Many startups fail because they target the wrong customers, leading to lengthy sales cycles and wasted resources. The speaker stresses that startups should aim for customers where success is more achievable, rather than spending 12 to 18 months on deals they can't close. This focus on the right early customers—those with faster sales cycles and easier adoption—is crucial for surviving the early stages. Failure to plan a clear go-to-market strategy often results in startups running out of resources before they can secure critical deals.

🚀 Shorter Sales Cycles for Faster Growth

The speaker concludes by reinforcing the importance of targeting customers that offer shorter sales cycles, faster adoption, and stronger growth potential. Startups should position themselves where the 'fish are practically jumping in,' making it easier to gain early traction and scale. The speaker invites viewers to leave questions and engage with more content, hinting at future videos that will further explore these concepts. The overall message is about strategy and efficiency in early customer acquisition.

Mindmap

Keywords

💡Go-to-Market Strategy

A go-to-market (GTM) strategy refers to a company's plan for how they will sell and deliver their product or service to customers. In the video, the speaker emphasizes how most startups misunderstand or fail to articulate their GTM strategy, often confusing it with general sales methods. The correct approach involves clearly identifying the early target customers and how the product aligns with their needs to drive revenue and traction.

💡Early Target Customers

Early target customers are the specific group of people or organizations a startup aims to attract during the initial stages of launching their product or service. In the video, the speaker highlights the importance of precisely identifying these customers based on factors like company size, pricing model, and pain points. Startups that fail to do this effectively often face long sales cycles and wasted effort.

💡Sales Cycle

The sales cycle is the process or duration it takes from the initial customer contact to closing a sale. In the context of the video, the speaker stresses the importance of targeting customers with shorter sales cycles, as this allows startups to gain revenue quickly. They warn against going after 'big fish' like large academic medical centers, which typically have longer sales cycles of 12 to 18 months.

💡Face Plant

A 'face plant' is a colloquial term for an embarrassing or complete failure. In the video, the speaker uses this metaphor to describe how startups often fail when asked about their go-to-market strategy, providing answers that show a lack of understanding or clarity, such as stating they’ll pursue direct sales without further specifics.

💡Fishing Analogy

The speaker uses fishing as an analogy to describe the process of selecting a target market and customers. 'Big tuna fishing' represents chasing prestigious, difficult-to-close clients, while 'fishing in the back bay' represents targeting smaller, less competitive markets where success can be achieved faster. This analogy emphasizes the importance of being strategic in customer targeting to avoid wasting resources.

💡Value Proposition

A value proposition is the unique benefit a product or service provides to its customers. The speaker in the video highlights how a startup's value proposition should closely align with the needs of its early target customers, ensuring that it solves their problems effectively. The clearer the value proposition, the easier it is to generate revenue and traction.

💡Overfished Logo

An 'overfished logo' refers to a large, prestigious company or client that every startup is trying to work with, often leading to saturated competition and long sales cycles. The speaker advises against targeting such clients in the early stages and instead recommends going after less sought-after, but more accessible customers where success is more achievable.

💡Litmus Test

A litmus test in this context refers to the criteria that help a startup determine whether a potential customer is an ideal early target. The speaker compares it to a chemical litmus test where blue turns red in acid. For example, a startup targeting regional banks may use factors like company size, pricing, and the ability to solve specific pain points as a 'litmus test' for identifying good potential customers.

💡Force Multiplier

A force multiplier refers to a tool or tactic that significantly increases the effectiveness of a business or process. In the video, the speaker explains how targeting smaller, understaffed companies can make a startup’s solution a force multiplier, as their product automates tasks that would otherwise require more employees, adding significant value to the smaller team.

💡Pushing Sand Up a Hill

This metaphor is used to describe a situation where a startup is expending a lot of effort without making progress. The speaker warns startups against targeting customers or markets that will take too long to convert or won't provide value quickly enough, as it can lead to wasted resources and a failed go-to-market strategy. Instead, they should aim for customers who align with their value proposition and are easier to close.

Highlights

The key question that challenges most startups is 'What is your go-to-market strategy?'

Many startups fail to define a clear target customer for their go-to-market strategy.

A vague response like 'we are targeting early adopters' is unacceptable without specific criteria.

An effective go-to-market strategy should include clear criteria such as customer size, pricing model fit, and how the product solves pain points efficiently.

Startups should aim for quick revenue and traction by targeting customers that align well with their value proposition.

The fishing analogy: go for smaller, closer targets (e.g., local hospitals) rather than big, difficult ones (e.g., large academic medical centers).

The importance of targeting less 'overfished' markets, like regional hospitals, where competition is lower.

A successful go-to-market strategy is like fishing where the fish are—targeting customers that are easier to reach and close.

Securing early customers with quicker sales cycles is crucial for building initial traction.

Examples of effective targeting include choosing specific sectors, like regional banks, where the product value proposition and pricing model align well.

Choosing early customers based on characteristics like smaller teams can lead to more significant impact and easier integration.

Startups should avoid targeting large customers with long sales cycles early on, as it can drain resources.

Having a well-defined litmus test for early customers helps in identifying the best initial targets.

Startups often fail when they spend too much time on long sales cycles with the wrong early customers.

The key to a strong go-to-market strategy is to focus on customers where you can create value quickly and sustainably.